Living in a ‘tethered’ economy

Imagine a future in which every consumer purchase is as complex as choosing a mobile phone. What will ongoing service cost? Is it compatible with your other devices? Can you move data and applications across devices? Can you switch providers? 

These are among the questions one must consider when a product is “tethered”—or persistently linked—to the seller. They’re also questions posed by Aaron Perzanowski, a law professor at Case Western Reserve University, in a recent article he co-authored in The George Washington Law Review.

Tethering, he said, is the business strategy of maintaining an ongoing connection between a product and its seller by making the item dependent on the company for its ordinary use. 

In many respects, Perzanowski said, we are already living in a tethered economy. Google Home and Amazon Alexa are common examples. As consumer goods get smaller and cheaper, tethered products are more readily available, he said.

“The combination of embedded software, persistent network connections and new transactional forms have fundamentally altered the relationships between firms providing goods and services and consumers relying on them,” he wrote. “While tethered products bring the benefits of connection, they also carry its pathologies. As sellers blend hardware and software—as well as products and services—tethers yoke the consumer to a continuous post-transaction relationship with the seller.’’

And that relationship brings concerns, Perzanowski said. For one, functionality and durability of the products and services. But more importantly, privacy and security issues.

Seller contracts have long sought to shape consumers’ legal rights with lengthy contracts that few customers bother reading, he said.

“But in a tethered environment, these rights may become non-existent as legal processes are replaced with automated technological enforcement,” Perzanowski wrote. He suggested some consumer protection measures, including:

• Provisions that allow customers to repair, repurpose and service their own devices.
• Disclosures on obsolescence: A key lock might last 50 years, but customers don’t know what to expect from a smart lock, for example, “because it is difficult for consumers to evaluate the lifespan of a tethered device. One solution might be to require sellers to disclose the anticipated lifetime and obsolescence risks.”
• A kill switch: Tethered product-makers can disconnect a consumer’s device from essential software and services. Perhaps the opposite should be possible as well: “The consumer should be empowered to disconnect the tether.”
• Privacy guarantees: “Sellers should not be able to lord over users by threatening the public disclosure of their private activities.” 

Perzanowski was joined in the research by Chris Jay Hoofnagle, from the University of California, Berkeley, and Aniket Kesari, from Yale University.

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